Got hammered with 3 lawsuits and no protection.
Hi,
I have a business that I been conducting for the past 10 years. It is a construction company and most of my savings of 10 straight years are in the same bank account I use to pay employees, contractors, suppliers, etc etc
I got served in a period of 3 years by 3 companies. I got all lawsuits settled but they hurted me badly and I am looking for the best asset protection attorney there is, I am looking for the cream of the crop. I have stayed away from buying real estate because of this stupid lawsuits for 3 years and now I am ready to start looking in to smaller deals so that I can get the hang of it, but once again I do want to be protected before I start.
I would really really appreciate if the community can recommend of someone reliable, highly reputable and willing to help.
Thank you very much!
It's probably less about who you hire, and more about what you do. Specifically to real estate - not your other businesses:
By using a corporate structure (LLC is typical) you limit someone's ability to attach to more than the one property that you got sued by. There are things you are supposed to do... not combine revenues between the different LLCs for instance... otherwise a lawyer can "pierce the veil" as they call it and try to say the companies are related. Most real estate lawyers could handle this for you.
Nevada is supposed to have some of the best foreign (ie. out of state) LLC protections... so WHERE you incorporate does make a difference though. If you google "Nevada LLC formation" you will get lots of websites you can peruse.
Otherwise, another really good idea is to get an umbrella policy that provides you liability protection across the board. You have to list, and maintain the properties you want covered - meaning if you add a property, you have to update your policy and pay more. The umbrella policy will force you to have higher liability limits on your individual properties. For us it is $300,000 per property. So if I only insured to $100,000 on my dwelling coverage, the liability policy would not kick in until $300,001 - so that $200,000 gap would be MY responsibility. The thing to know is that all of this can start to get pricey. Maintaining registrations for your LLCs can be $150 - $250 a year per LLC. So some people choose to bundle several properties per LLC. I have 25 properties... so for me at $150 a year, that is $3,750 if I went the LLC route. If you want to be doubly covered and also carry the umbrella, you are talking about a couple of more thousand dollars a year. So it can get cost prohibitive at some scale... $5,000 in extra expenses is likely the loss of at least an entire year of rental income on a typical rental property... if not more. Also, if your properties are encumbered (financed), they are much less attractive to a lawyer... they can't just say "we want your property" because there is a lien attached, so there is less value there.
I'm sure others will suggest an actual person / company.. but hopefully some of that helps!
Randy
Contact your local Bar Association or the American Bar Association. They will direct you to the best.
